Brown Orders UK Banks To Come Clean

From The Financial Times. It’s perhaps instructive to recall in this vein that it was Britain’s shift to recapitalization in October, itself prompted by Ireland’s guarantee of bank deposits, that forced Secretary Paulson to re-engineer the TARP.

Brown orders Britain’s banks to come clean

By George Parker, Lionel Barber and Jean EagleshamFinancial TimesPublished: January 17 2009 00:05 | Last updated: January 17 2009 00:05

Gordon Brown told banks to come clean over the extent of their bad assets on Friday, admitting the scale of the banking crisis could threaten the global economy with a new phenomenon: “financial isolationism”.

With speculation growing that the government will be forced to stage another bank rescue, the prime minister told the Financial Times he had been urging the banks for almost a year to write down their bad assets. “One of the necessary elements for the next stage is for people to have a clear understanding that bad assets have been written off,” he said.

Speaking amid mounting market concerns that banks face further heavy losses, Mr Brown said: “We have got to be clear that where we have got clearly bad assets, I expect them to be dealt with.”

Mr Brown’s team is looking at options to keep the banks afloat as new writedowns threaten to eat through the 50bn pounds in capital injected in October, of which 37bn pounds was provided by the taxpayer. Officials are working on plans possibly to underwrite the toxic assets or buy them outright and place them in a “bad bank”.